Produced by | Bullet Finance

Art Design by | Qianqian

Reviewed by | Songwen

In July 2026, Luxshare Precision made its debut on the Hong Kong Stock Exchange (HKEX), completing its dual 'A+H' platform setup, with a market cap that once surpassed RMB 440 billion. As the afterglow of this capital celebration lingered, the Wang family unveiled their next strategic move.

According to HKEX disclosures, Lixiang Innovation recently filed its second application for a mainboard listing on the HKEX. Founded in 2018 by Wang Laixi, the younger brother of Luxshare Precision's founder Wang Laichun—who also chairs Lixiang Innovation—the company bears a distinct 'Luxshare' stamp in both its growth trajectory and organizational framework. In just eight years, Lixiang Innovation has catapulted to the top tier of global consumer electronics camera module suppliers through a series of aggressive M&A and financing maneuvers. However, behind this meteoric rise lie pressing challenges: customer concentration, related-party transactions, underutilized production capacity, and mounting debt repayment pressures.

As cyclical market dividends peak, capital market observers are questioning whether Lixiang Innovation can reduce its reliance on major clients, efficiently digest assets from past M&As, and deliver on expectations for a second growth phase.

1. Family Leadership and M&A-Driven Growth

Lixiang Innovation's ascent exemplifies M&A-fueled expansion.

In 2018, Wang Laixi, who had spent over a decade as general manager at Luxshare Precision, founded Lixiang Innovation. Much of its core management team hails from the Luxshare Precision ecosystem.

Wang Laixi serves as executive director, overseeing strategic planning, business direction, and overall operations. Wang Laichun acts as both non-executive director and chairperson of Lixiang Innovation, while also chairing Luxshare Precision.

According to the 2025 Hurun Rich List, Wang Laichun ranks 55th with a fortune of RMB 85.5 billion, making her the wealthiest woman in Chaoshan and widely recognized as the 'Queen of the Apple Supply Chain.'

The prospectus reveals that Wang Laixi, Wang Laichun, Wang Laisheng, and Wang Laijiao—the four siblings—collectively form Lixiang Innovation's controlling shareholders. As of July 22, 2026, they jointly control approximately 48.06% of the company's equity.

From its inception, Lixiang Innovation pursued an M&A-led expansion strategy.

In 2018, it acquired Lite-On Technology's Camera Module (CCM) division, gaining access to mature production lines, patent portfolios, and customer networks within the Android ecosystem, thereby entering the consumer electronics camera module market.

Over the next seven years, Lixiang Innovation rapidly expanded its industrial portfolio through three key M&A deals.

In 2021, it acquired Cowell Electronics, securing entry into the camera module supply chains of leading consumer electronics brands. In 2022, it spent RMB 910 million to acquire Lite-On Technology's imaging business unit, extending its reach into smart office sectors like printers and scanners. In 2025, it completed the acquisition of 80% of Konica Minolta's Shanghai factory, acquiring mass production capabilities for high-end optical lenses and automotive lenses.

Following these capital operations, Lixiang Innovation has built a comprehensive optical product matrix spanning emerging sectors such as consumer electronics, automotive electronics, smart offices, XR, and robotics.

(Image/Lixiang Innovation's official website)

This expansion logic closely mirrors that of Luxshare Precision. After going public, Luxshare Precision relied on continuous high-frequency M&A to vertically integrate within the Apple supply chain—from 'components to modules to complete devices'—and then replicated its precision manufacturing capabilities into new sectors such as automotive and AI computing, achieving leapfrog development.

The key difference lies in their strategic foundations: Luxshare Precision used its connector business as an internal base to expand into multiple sectors, while Lixiang Innovation, from its inception, targeted the single optical sector, relying on M&A for rapid market entry before vertically integrating the supply chain and expanding downstream applications.

The efficiency of capital is directly reflected in industry standing. According to Frost & Sullivan data, by 2025 revenue, Lixiang Innovation ranked second globally in the consumer electronics camera module sector and first among Chinese mainland companies.

In the mid-to-high-end smartphone camera module segment, it held a 7.4% market share. In the laptop and tablet camera module segments, it ranked first among global manufacturers, with market shares of 16.0% and 22.1%, respectively.

(Image/Lixiang Innovation's prospectus)

However, the close familial ties between Lixiang Innovation's actual controllers and Luxshare Precision have raised market concerns about the company's operational independence.

The prospectus discloses that Lixiang Innovation will continue to engage in related-party transactions with Luxshare Precision. From 2026 to 2028, the annual caps for procurement framework agreements between the company and Luxshare-affiliated entities are projected at RMB 3.289 billion, RMB 3.618 billion, and RMB 3.980 billion, respectively.

Although the company has introduced independent non-executive directors as a supervisory safeguard at the governance level, persistent large-scale related-party transactions continue to raise questions about the fairness of transaction pricing.

2. Integrated Customer-Supplier Model: 70% of Revenue Depends on a Single Client

Leveraging M&A to exchange capital for time has enabled Lixiang Innovation to swiftly secure orders from top-tier clients, driving explosive revenue growth but also embedding a high risk of customer concentration.

According to the prospectus, from 2023 to 2025, Lixiang Innovation's revenue reached RMB 15.248 billion, RMB 27.914 billion, and RMB 34.755 billion, respectively, with a compound annual growth rate (CAGR) of 51.0%. Net profit stood at RMB 588 million, RMB 1.052 billion, and RMB 1.690 billion, respectively, with a CAGR of 69.6%.

In the first five months of 2026, the company achieved revenue of RMB 13.624 billion, up 14.7% year-on-year, and net profit of RMB 776 million, up 48.5% year-on-year.

From a revenue structure perspective, over 90% of the company's revenue comes from consumer electronics, while automotive electronics and smart office businesses currently contribute a minimal share. The second growth curve is still in its early stages, making it difficult to offset cyclical fluctuations in the consumer electronics sector in the short term.

(Image/Lixiang Innovation's prospectus)

The core driver of this growth curve is the sustained increase in orders from the largest client, with dependency on this single major client continuing to rise.

During the reporting period, revenue from Client A reached RMB 6.083 billion, RMB 17.181 billion, RMB 24.689 billion, and RMB 9.285 billion, accounting for 39.9%, 61.6%, 71.0%, and 68.2% of the company's total revenue, respectively. Revenue from the top five clients combined also increased, reaching 77.9%, 88.7%, 90.0%, and 90.1%, respectively.

(Image/Lixiang Innovation's prospectus)

According to the prospectus, Client A is a global leading consumer electronics brand company. While Lixiang Innovation has not disclosed Client A's identity, the market widely believes it refers to Apple.

Notably, this business model, which relies heavily on a few core clients, means that client loss, order fluctuations, or cancellations could directly impact the company's performance. The exclusion of O-Film Tech from the Apple supply chain serves as a cautionary tale.

What makes this situation even more unique is the bidirectional 'customer-supplier integration' model: Client A is not only Lixiang Innovation's largest client but also its core raw material supplier. During the reporting period, the company procured sensors, PCBs, VCMs, and integrated circuits from Supplier A, with procurement amounts accounting for 20.7%, 36.5%, 48.5%, and 47.3% of total procurement, respectively.

This cost structure further amplifies operational pressures. According to the prospectus, inventory costs constitute the largest portion of sales costs, maintaining ratios of 88.0%, 90.1%, 90.9%, and 90.1% during the reporting period.

With sales dependent on orders and procurement reliant on the same dominant giant for components, this bidirectional dependency exacerbates bargaining disadvantages and squeezes profit margins.

The prospectus shows that Lixiang Innovation's comprehensive gross margin has long hovered at low levels, with margins of 12.0%, 10.8%, 10.8%, and 11.6% in each period. In comparison, Sunny Optical achieved a comprehensive gross margin of 19.7% in 2025, highlighting a significant gap.

The costs of M&A expansion are also reflected in the balance sheet. Multiple cash acquisitions, coupled with sustained capital expenditures on production lines, have increased goodwill and debt burdens.

As of the end of 2025, Lixiang Innovation's goodwill stood at RMB 1.958 billion, making post-M&A integration and asset digestion critical tasks.

Additionally, the company's leverage ratio rose from 32.6% at the end of 2025 to 42.5% as of May 31, 2026, primarily driven by increases in bank loans and lease liabilities.

According to the prospectus, bank loans reached RMB 4.77 billion as of May 2026, up significantly from RMB 3.464 billion at the end of 2025. This debt expansion brings tangible principal and interest repayment pressures, testing cash flow management.

(Image/Lixiang Innovation's prospectus)

Bullet Finance reached out to Lixiang Innovation regarding progress in customer diversification and the fairness of related-party transaction pricing but received no response as of press time.

3. Underutilized Production Capacity and the Countdown to Earnout Deadline

Rapid expansion relies heavily on capital infusions, and Lixiang Innovation has maintained a tight financing rhythm in the primary market, attracting a prestigious roster of investors.

2022 marked Lixiang Innovation's financing peak, with three rounds of funding—Series A, Series A+, and Series A2—raising approximately RMB 3.24 billion in total.

The Wang family contributed RMB 1.6 billion through Lixiang Limited, while attracting top-tier institutions such as IDG Capital, Sequoia China, Legend Capital, CPE Source Peak, and Jiayu Capital, as well as state-owned platforms like CITIC Securities Investment, China Electronics Zhongjin, and others.

From 2023 to 2024, Lixiang Innovation continued its financing efforts, further expanding its investor base.

In March 2023, China Mobile's China Mobile Fund invested RMB 500 million in Series A2+. In June 2024, the company completed a RMB 1.5 billion Series B funding round led by Wuxi Guoshou, China Mobile Investment, and CITIC Securities Investment, valuing the company at RMB 16.32 per share.

Based on the Series B cost per share, Lixiang Innovation's post-money valuation reached RMB 22.5 billion.

Tied to this intensive financing are stringent earnout agreements, with the core term requiring Lixiang Innovation to complete an IPO within seven years from March 1, 2022. Failure to go public on time entitles investors to demand reinstatement of redemption rights.

Originally, Lixiang Innovation submitted its prospectus to the HKEX in November 2025 but failed to pass review within six months, causing the prospectus to automatically lapse in late May 2026. With part of the time window already consumed, the company has roughly two and a half years left to complete its listing.

According to the prospectus, proceeds from this IPO will fund research and development (R&D) and innovation in precision optical products and related technologies, optimize and upgrade smart manufacturing platforms, invest in and acquire high-quality upstream targets, repay bank loans, and supplement working capital.

Notably, the IPO continues to allocate funds for M&A, indicating the company's intent to further deepen integration along the optical supply chain. Additionally, the funding plan does not include large-scale capacity expansion projects, reflecting the reality of underutilized production capacity in some business segments.

According to the prospectus, during the reporting period, the capacity utilization rates for consumer electronics products were 51.4%, 66.6%, 73.7%, and 65.3%, respectively, showing a rebound but with fluctuations. Capacity utilization rates for automotive electronics products hovered between 36.2% and 43.6% at low levels.

(Image/Lixiang Innovation's prospectus)

Regarding low capacity utilization in the automotive business, the company explained that rapid industry iteration and sudden client shifts prompted a strategic shift to focus on top-tier clients, anticipating that subsequent order releases would drive capacity utilization higher.

For the decline in capacity utilization in the smart office segment during the first five months of 2026, the company attributed it to temporary disruptions caused by production line relocation and recommissioning.

For an optical company established just eight years ago with revenue exceeding RMB 30 billion, Lixiang Innovation has achieved far faster growth than peers through M&A and capital operations. However, as the dividends of its 'buying spree' fade, deep-seated issues such as customer concentration, thin profit margins, underutilized production capacity, and rising debt are surfacing one by one.

It remains uncertain whether the company will manage to go public within the remaining earnout period and, once listed, carve out an independent growth trajectory distinct from the 'Luxshare ecosystem' and 'Apple supply chain'. Bullet Finance will keep a close eye on subsequent developments.

*The featured image in this article is sourced from Shutterstock and is used under the VRF agreement (Virtual Reality/Augmented Reality Featured Image License Agreement).